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About This Technology

December 2005

Internet commerce comprises use of the Internet to buy and sell goods and services. The underlying technology is the Internet infrastructure. Software enables Internet-commerce applications; this Technology Map focuses on the software technologies. Internet commerce includes three basic steps: pretransaction (product promotion and product selection), transaction (product ordering and payment), and posttransaction (delivery and after-sales service) activities. Internet and non-Internet elements of the process interact extensively. Consumers may browse online but buy offline, as is currently the case with many U.S. car purchases. Alternatively, consumers may look offline (for clothes or books, for example) but buy online to obtain lower prices and avoid sales tax. In many cases, however, the entire process takes place over the Internet—for example, in the purchase of CDs, stocks, or airline tickets.

Retail Internet commerce continues to be the domain of very large online companies such as Amazon and eBay and to focus on the transaction of items such as books, CDs, consumer electronics, and apparel. But digital content is beginning to play an increasingly important role in retail e-commerce. Digital music downloads are leading the way, but digital publications, services, and even videos are also becoming more widespread. Online advertising for these items is also growing significantly.

In B2B commerce, the Internet has created a new sales channel that has disrupted the supply chain in many industries, with procurement and supply-chain management moving to the Internet. Significant Internet-commerce opportunities exist today in both B2C and B2B arenas for companies that offer a wide range of products and services. Several issues, not all technological, remain unresolved, but the benefits of cost reduction, better access to customers and suppliers, and improved efficiency are driving the solutions.